House passes bill to reform SC Retirement System

House Speaker Jay Lucas (District 65-Darlington) issued the following statement after the House passed H.3726, a bill that seeks to restore the solvency of the South Carolina Retirement System and institutes reforms to ensure stability.

“The passage of today’s bill is a giant first step towards honoring our commitments to state retirees and steering our retirement system back on a path to solvency. Correcting the inaccuracies of the past is the only way we can guarantee positive investments for the future. This legislation seeks to protect every South Carolina taxpayer by stopping the financial hemorrhage before the system’s unfunded liabilities spiral beyond repair.

“Although much restructuring and reform is still needed for our state’s retirement system, I am very proud of the proposal the Joint Study Committee agreed upon. The passage of this bill is only possible because of the hard work House and Senate members put forward during the off season. Because of our teamwork, I am confident Governor McMaster will receive a bill for signature in a timely manner, which should ensure every South Carolinian that the General Assembly is committed to keeping our state’s finances in order.”

Provisions included in the Retirement System Funding and Administration Act:

• Increases the employer contribution rate
• Places a cap on the employee contribution rate
• Reduces the assumed rate of return on investments and puts protections in place to oversee changes in future rate adjustments
• Modifies the amortization rate period to reduce unfunded liabilities
• Implements governance recommendations from the Funston Advisory Services and Legislative Audit Council
• Requires a four year rotation schedule for fiduciary audits of PEBA and the RSIC (Retirement System Investment Commission)

*Speaker Jay Lucas and Senate President Pro Tempore Hugh Leatherman created a joint study committee, which met in the off-session to develop recommendations for mirrored legislation that could be introduced in both Chambers to ensure quick resolution of the issue. The Senate’s version of the bill, S. 394, is set for special order on the Senate calendar.

*In 2013, legitimate concerns were shared over the RSIC’s investment management. To ensure that South Carolinians’ investments were being managed in the most efficient and cost effective way, then-Speaker Pro Tempore Lucas, Representatives Gary Simrill, Greg Delleney, Dennis Moss, and former Representative Phil Owens, sent a letter to LAC requesting an audit of the RSIC. The audit’s findings were revealed in December 2015 and served as the catalyst to address this issue as quickly as possible.